6 Quick Tips to Keep Your Building’s Expenses Down

“Hi Kari.  What are some tips to keep my building’s expenses down?”

This is such an important question.  I can talk for two hours at a seminar on this question alone.  Let me give you the following 6 quick tips that may help you:

Tip #1: Respond quickly to maintenance requests.  The number one reason a tenant moves out is due to lack of maintenance. Having to turn over a unit (especially one that is already at market rent) interrupts your cash flow.  Not only that, but in today’s social media word, your angry resident not only tells their friends, they can tell the world about the experience through the Internet and social media sites. So not only are you dealing with loss of rent and the cost of the turnover, but possibly advertising costs along with having your reputation negatively impacted.

Tip #2:  Every year, bid out your maintenance vendors in order to stay current with the most optimal vendor market prices. These might include services you regularly utilize such as painting, pool service, carpet, plumbing, and electrical.  For example, you might compare three painting vendors, making sure to ask about extra charges that might come up on the job site, such as not painting over hardware, painting ceilings or inside cabinets. Many paint vendors bid on the size of the unit but then send a bill that includes charges for “extra items” such as walk in closets or an extra coat for color change. An industry trade magazine, such as Apartment Age magazine, is a great resource for finding vendors to compare pricing.

Lastly, remember to balance and consider how hard you grind down any vendor’s pricing.  The quality of their work may suffer as a result of negotiating too low of a price, which may cost your building more in the long run with things like watered down paint or sloppy work that takes too long.

Tip #3:  Notice cleanliness and leaks.  Every 6-months, check smoke alarms, conduct plumbing walk-throughs, check appliances and A/C / heat as well as looking out for small leaks and other issues requiring preventative maintenance.  A minor plumbing issue may become major one if you don’t catch it early. A single running toilet can cost thousands in water charges.  Make sure you or your on-site manager is taking care of cleaning, walking the property, and looking for leaks.  Encourage residents to stay on top of cleanliness in their unit to help prevent pest infestations, and carpets will last longer if vacuumed often and professionally cleaned at least once a year.  While walking the property make sure to look for liability issues like a loose rail or trip hazard.  This could save you thousands if identified and taken care of quickly.

Tip #4: Consider collecting laundry and vending machine money yourself.  When cash is involved, you just never know and it also encourages you to go to the property more which is always a good thing.

Tip #5: When property prices dip, sometimes it’s a good opportunity to renegotiate property taxes.  You will need to present 3 close by comps that are lower to get started.

Tip #6:  Bid-out insurance.  When bidding your property insurance and other coverages, make sure to ask your broker to use his or her industry relationships and have multiple companies quote your coverage.  Know that an insurance agent typically represents a single company while a broker will typically have access to multiple rates and services.

Editor’s Note:  We SAVE you money!  The Apartment Association of Greater Los Angeles offers a member-only, 5% discount on a variety of insurance coverages, including property, workers compensation, umbrella and many other types of policies.  The program is being offered through Newfront Insurance, a leading, full-service brokerage with extensive expertise in the multifamily housing industry.  Apartment Association of Greater Los Angeles members should go to www.AAGLASavesU.com to receive a free quote, which Newfront will turnaround in 48-hours or less, or members also call Newfront Directly at (855) 830-8954.